Rosalind Evans
Summer rental prices in the Hamptons are experiencing a decrease of 20% or more as property owners face an oversupply of rentals, resulting in affluent individuals, such as Wall Streeters and tech workers, scaling back their summer expenditures.
According to Judi Desiderio, CEO of Town & Country Real Estate in East Hampton, approximately 5,700 seasonal rentals are available for this summer on the South Fork peninsula in New York, which encompasses most of the Hamptons. This number is double the typical amount of homes available for a summer season before the Covid pandemic-induced shift in vacationing habits.
Desiderio stated, “There’s an excess inventory at every level.”
The surplus of rentals in one of America’s most affluent beach communities is leading to price reductions. Brokers report that many homeowners are cutting prices for their rentals by 10% to 20%, and further price drops are expected as homeowners rush to secure renters before Memorial Day.
Enzo Morabito, a Hamptons broker with Douglas Elliman, expressed, “We have an overwhelming supply, and this trend extends throughout the Hamptons.”
However, the notion of “bargains” remains relative in the Hamptons, where a typical 3-bedroom house fetches a rental price ranging from $60,000 to $100,000 for the summer, depending on the location. Oceanfront homes can demand over $1 million for a month.
Nonetheless, the aftermath of the pandemic has resulted in a record number of available rentals, and brokers believe it may take a few more summers for prices and demand to stabilize. In the spring of 2020, numerous affluent New Yorkers flocked to the Hamptons, with many purchasing homes. This led to a surge in sales volume and prices, with the median sales price increasing by over 40% to surpass $1.2 million.
Now, many of these new homeowners are seeking to rent out their properties, either to travel during parts of the summer or to generate additional income for home expenses. This surge in supply has disrupted a market that traditionally had limited rental options and consistently high prices.
Desiderio explained, “We had a balanced market before Covid. Demand wasn’t excessive, and prices remained stable for years.”
Additionally, brokers state that many new homeowners decided to rent out their properties because they expected the high rental prices seen in 2020 and 2021, which have become unrealistic.
Gary DePersia from the Corcoran Group shared, “I have clients approaching me, saying, ‘I want to rent my house for $250,000.’ I informed them that it was no longer realistic. The market has changed.”
DePersia advises his rental clients to offer more flexible lease terms, such as two weeks or a month, rather than the entire summer, and to lower their prices.
Another significant challenge is the decline in demand. Since the Hamptons are heavily reliant on the Manhattan economy, particularly the finance and tech sectors, it is starting to feel the effects of a falling stock market and a reduction in IPOs and capital markets. Wall Street bonuses dropped by 26% last year, and several major Wall Street firms and banks, including Morgan Stanley, Citigroup, Bank of America, and Lazard, have announced job cuts.
“The Hamptons is tied to Wall Street with a strong connection,” Desiderio noted. “When Wall Street prospers, we prosper. When they retract, we retract.”
The high-end rental market, particularly oceanfront properties, remains the bright spot for property owners. Brokers reveal that one oceanfront home in the Hamptons has already been rented for $2 million per month for this summer, although the brokers did not disclose specific details.
Furthermore, at least three other homes are reportedly available for rent at $2 million or more for the entire summer, signalling that there is still demand for exclusive, luxury properties.
Gary DePersia has a remarkable oceanfront rental in Bridgehampton, spanning 12,000 square feet, which is currently being offered at $600,000 for two weeks. This newly constructed residence boasts 10 bedrooms, over a dozen bathrooms, multiple kitchens, a pool overlooking the ocean, and a rooftop deck with a hot tub. Unsurprisingly, the property has already attracted several potential renters.
“When it comes to oceanfront properties with new construction, extensive amenities for entertainment and families, there are simply not many available,” DePersia emphasized. “Moreover, the individuals interested in renting such a place are less affected by stock market fluctuations or job cuts.”
While the overall Hamptons rental market is experiencing a decline due to the oversupply of properties and a slowdown in the Manhattan economy, luxury oceanfront properties still appeal to discerning renters who seek a rich experience and are not significantly impacted by financial fluctuations.
As the summer rental season approaches and homeowners strive to fill their properties, it remains to be seen how rental prices will evolve in the Hamptons. The market is grappling with abundant supply and a more cautious demand from Wall Streeters and tech workers. However, the allure of the Hamptons and its exclusive beachfront properties continues to captivate those seeking the ultimate summer retreat.
